What Does It Cost to Meet and How Do You Get Paid?
This is a good and important question, and we will spend time in our first meeting talking about this. We will make sure that you understand and are comfortable with how our compensation works and let you decide which method is right for you.
Forms of Compensation
We do receive compensation at Custer Financial Advisors We feel like the financial industry is often confusing regarding cost and fees unfortunately, so we aim to help answer that as best we can for you with this page. We strive to be transparent with our clients about how we're compensated for the value we offer. Clients can choose their preferred payment method based on what they feel is best for them.
Options you have:
Options 1: Advisory Fee Only Account
The fee only model includes everything that our hourly consulting fee covers. We have on going in-depth review meetings regarding client’s financial plan. (see graphic below) We are not charging an additional hourly fee with our advisory fee management. The fee is based on your assets under managements which includes our team of financial planners, investment research, portfolio managers working together to invest and manage the assets. This model is typically used by clients who want more than a one-time financial plan and do not want to worry about investing their assets on their own and want our teams to manage their assets.
Rather than being charged an upfront commission or hourly consulting fee on your investments, you'll be charged a percentage of your assets with the fee-based model. You will be charged this fee every year, which comes out of your account, but you won't owe any hourly consulting fees. A significant reason people choose to use the advisory account is because there is no charge to make changes in your account, the flexibility of investments options. This means if we think it's best for your situation we make the change and you won't get any additional charges.
What We Like About the Asset Under Management Model:
We encourage open communication with our clients. We believe that the more we know about your financial situation, the more valuable we can serve you. Therefore, we encourage you to reach out to us at any time with questions, concerns, or changes to your life circumstances. We do not bill you for our conversations or meetings.
We prefer to meet with our clients at least once a year to review their financial plan. This is an opportunity to discuss your goals, implement adjustments to your plan, and answer questions you may have.
Our team spends many hours each week researching and considering investment options. We take the time to understand your goals, timeline, and risk tolerance so that we can invest your assets accordingly.
We are compensated on a performance-based basis, which means that we share in the success of your investments. This helps align our interests with yours, as we are both motivated to see your account grow.
With our independent Broker-Dealer (LPL) we have access to many different investment companies. We can choose from a wide array of options for each asset class.
You never wonder if we call, email, or recommend to meet if it’s a good idea for you. We don’t charge for time so when we talk we think it’s to provide value to you.
Option 2: Flat Fee - Hourly or Project Based Consulting Fee
We offer an hourly planning fee or projects-based plan. Below you can find a graphic of what is included in our hourly consulting.
You tell us what you need help with, and we bill you accordingly. This is a good option for people who want to manage their own investments but need some guidance on specific topics, such as retirement planning, tax planning, cash flow, risk management, investment consultation or help with trying to find tax-efficient distributions.
With the hourly consulting we prefer our clients to tell us the items they would like to focus on. That way we only charge you for time that you feel is most valuable to you. This type of arrangement works well for people who prefer to manage their investments on their own but want professional help to look over their plan, find areas to plan around that they may have not thought of or find common pitfalls of other do it yourself investors.
Option 3: Commission-Based Model (Front-Load Charge)
With this model, if you purchase a mutual fund, or other investment, you are charged a commission. This commission goes to pay the investment fund company, the advisors, and the managers of your funds. Often times for long-term investments, this is a one-time fee (which the industry calls an A-Share). The amount of commission charged by the fund company varies depending on the company and how much money you are investing with them. After you pay the one-time commission, you will pay a smaller annual fee (called a 12b1 fee, as part of the funds’ expense ratio.
What we like about the Front-Load Charge:
-This can be the less expensive option if you are investing for the long term and you are willing to "buy and hold," meaning you don't need to make a bunch of trades in your account to feel like you're being a good investor.
-The more money you invest, the lower your commission percentage can be.
Downside of the Commission-Based (Front-Load) Model:
- With the front-load charge we are limited to what investments we would use in your account. We typically like to stay with one fund company, so you don’t have to pay the front-load commission multiple times and can reach breakpoints in the commission to help lower that cost. Therefore, we are limited on the investment fund selections because we wouldn’t want to keep changing companies and incurring an additional commission.
What's the Best Option for Me?
This is a great question and one that our team has spent a lot of time and thought trying to determine. The truth is that we don't believe there is a 'one size fits all' approach to how to pay for your the value your financial planning team provides. Like the rest of your financial plan, what is right for you depends on your personal situation and what your goals are. It's important to us that you understand your options and are able to make the decision you feel is best for you.
We hope this page helped you understand a little better!
Disclosures:
*Securities and advisory services offered through LPL Financial, a Registered Investment Advisor, Member FINRA/SIPC.
The LPL Financial Registered Representatives associated with this site may only discuss and/or transact securities business with residents of the following states: MI.
LPL Financial and LPL representatives do not provide tax or legal advice.
All investing involves risk including loss of principal. No strategy assures success or protects against loss. Stock investing includes risks, including fluctuating prices and loss of principal. Investing in mutual funds involves risk, including possible loss of principal. Fund value will fluctuate with market conditions and it may not achieve its investment objective. Bonds are subject to market and interest rate risk if sold prior to maturity. Bond values will decline as interest rates rise and bonds are subject to availability and change in price. ETFs trade like stocks, are subject to investment risk, fluctuate in market value, and may trade at prices above or below the ETF's net asset value (NAV). Upon redemption, the value of fund shares may be worth more or less than their original cost. ETFs carry additional risks such as not being diversified, possible trading halts, and index tracking errors. Alternative investments may not be suitable for all investors and should be considered as an investment for the risk capital portion of the investor’s portfolio. The strategies employed in the management of alternative investments may accelerate the velocity of potential losses.
